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Archived updates for Tuesday, October 25, 2005

Dismissal with Prejudice for Lack of Standing on Second Try

In Sicom Systems LTD. v. Agilent Technologies, Inc., et al. affrimed the dismissal with prejudice of a complaint for patent infringement in light of Licensor Canada’s right to permit infringement in certain cases, the requirement that Sicom consent to certain actions and be consulted in others, and the limits on Sicom’s right to assign its interests in the patent.

[W]e hold that the Agreement transfers fewer than all substantial rights in the
patent from Canada to Sicom. See Calgon, 726 F. Supp. at 986. Accordingly, we
affirm the district court’s order dismissing Sicom’s complaint. We stress the
principle set forth in Independent Wireless requiring that a patent owner be
joined in any infringement suit brought by an exclusive licensee having fewer
than all substantial rights. 269 U.S. 459; see also Prima Tek II, 222 F.3d at
1377; Textile Prods., 134 F.3d at 1484; Rite-Hite, 56 F.3d at 1552; Abbott
Labs., 47 F.3d at 1131. Unlike an assignee who may sue in its own name, an
exclusive licensee having fewer than all substantial patent rights and seeking
to enforce its rights in a patent generally must sue jointly with the patent
owner. Ortho, 52 F.3d at 1030. Thus, Sicom does not have standing to sue alone
without joinder of Canada under the Patent Act. Calgon, 726 F. Supp. at 985
("[T]he patent holder or assignee is a necessary party to an infringement action in order to achieve consistency of interpretation and to avoid multiplicity of litigation. Under federal law, the patentee is the real party in interest in such litigation.").

. . .

We conclude that the district court did not abuse its discretion by
dismissing this case with prejudice. First, as the district court noted, this
action was Sicom’s second suit that was dismissed for lack of standing. Second,
as the district court noted, "Sicom has not contested Defendants’ assertion that
any dismissal by the Court of this action should be with prejudice, because
Sicom has twice attempted and twice failed to establish standing." Sicom, slip
op. at 6. Although Sicom correctly argues that dismissal with prejudice is
generally inappropriate where the standing defect can be cured, Sicom already
had a chance to cure the defect and failed. See Textile Prods., 134 F.3d at
1485. Accordingly, we affirm, holding that the district court was within its
discretion to dismiss the case with prejudice.
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